Google Acquires On2 Technologies

In a deal that underscores its commitment to the Web, Google on Wednesday said that it would acquire On2 Technologies, a video technology company, for $106.5 million.

"Today video is an essential part of the Web experience, and we believe high-quality video compression technology should be a part of the Web platform," said Sundar Pichai, VP of product management at Google, in a statement. "We are committed to innovation in video quality on the Web, and we believe that On2's team and technology will help us further that goal."

Google declined to comment on whether it intends to open-source the company's technology to accelerate Web video in the browser. Such a move would be consistent with Google's interest in providing improving browser graphics capabilities so that technologies like Adobe's Flash are not necessary.

Google may also be interested in promoting On2's video codecs (VP6, VP7, and VP8) as alternatives to H.264 and Ogg Theora, the open video format that Mozilla is supporting in Firefox 3.5. According to On2, VP8 video uses about 40% less data than H.264 video. On a site like YouTube, which serves hundreds of millions of videos per day, any bandwidth savings is significant.

The acquisition could also lead to improved playback of video on mobile phones, particularly on Android devices.

Mike McGuire, VP of research in the media industry advisory services group at Gartner, sees the acquisition as one that has broad strategic value.

"Google's stated mission is to keep things open," said McGuire. "This is not simply a point solution to do one or two things. This is something to keep Google's overall operations as efficient as possible. This is going to be an important enabler to do that."

Google's previous acquisition, Korean blog company TNC, was announced last September. The acquisition before that, in July 2008, was Omniso, a consumer video service.